During your next strategic planning session, what will be on the agenda when forecasting your credit union’s future? The 2023-2024 CUNA Environmental Scan explores trends shaping the future of the credit union industry and provides insights that will allow credit unions to make intelligent decisions.
Here are four of the key trends the report identifies:
1. Future-focused leadership. During the pandemic, many credit unions took their eyes off the horizon and focused on getting through the challenging times. Concentrating on short-term survival was natural and, in some ways, sensible. But it’s time to get our eyes back on the horizon, says Tim Harrington, president at TEAM Resources.
The world of financial services never stopped. It continued to change at the fastest pace ever. While many credit unions kept pace with the rapidly changing market, others have fallen behind. The annual American Customer Satisfaction Index reveals a reduced perception of credit unions.
While credit unions traditionally enjoyed a significant advantage over banks in consumer satisfaction scores, that advantage has turned into a deficit—and that deficit is increasing.
The change in scores showed up after 2014, when digital banking became the norm for most consumers.
As the world became digital first, many credit unions delayed, not wanting to be on the “bleeding edge.” But many weren’t on the leading edge, either. Most were somewhere in the “late adopter” category.
2. The struggle for relevance. Credit unions are in a battle for new members and relevance within the financial services marketplace. The battle is not only with fintechs and large financial institutions that can pour millions of dollars into the next best technology, but also in attracting younger members, says Wendie Ellis, director of payment services at $2.1 billion asset Horizon Credit Union in Spokane, Wash.
The average age of credit union members in North America is 53 years and rising, according to the World Council of Credit Unions. The older generation of members has supported credit unions for many years, raising their families and building their careers while depositing money and acquiring loans at their credit unions.
But credit unions can no longer depend solely on older consumers to sustain them in the long term. To grow and continue to give back to local communities, credit unions must be relevant to millennials (born between 1981 and 2000), Generation Z (born between 2001 and 2020), and generations that follow.
3. Change management. Leadership experts coined the term “VUCA” (volatile, uncertain, complex, and ambiguous) in 1987, and the military used it to describe the complex and rapidly changing conditions of the Cold War. The term gained popularity to describe the increasing pace of change and complexity of the business world.
Organizations struggle to adapt to rapid advancements in technologies, shifts in consumer preferences, the emergence of new global markets, changes in regulatory requirements, increased competition, and the existence of a dynamic talent landscape, says Tracy Nelson, president/CEO at Aspire Talent Group LLC.
Change management is a process and a set of critical competencies required for savvy organizations to survive and thrive in our new normal. Organizations become more change ready by building change capacity and capabilities at all levels.
Change initiatives often fail because organizations don’t manage the people side of the change. Some people thrive on change while others withdraw and seek comfort in the “old way of doing things.”
Leaders should learn to view change not as a disruptor of the work but part of the work. If organizations cultivate an environment that rewards continuous learning and improvement, they build agility by making iterative changes in the flow of work.
4. Advocacy. While the core issues may not change, credit union leaders must adjust their approach to advocacy because of how people communicate, says Jason Stverak, deputy chief advocacy officer at Credit Union National Association.
Credit union advocates must examine how they’re reaching out to and educating the next generation of members. They also need to educate members of Congress and other elected officials that a strong and vibrant credit union movement is important to the U.S. economy and to the communities they represent.
Credit unions are always on offense because that approach gives credit unions the tools, rules, and ability to serve their members and communities. Many of the threats credit unions face involve noninterest revenue: the continual assault on interchange and overdraft protection.
That’s not going to change, Stverak says, especially considering that the Consumer Financial Protection Bureau director gives speeches about junk fees.